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Willmar council sets two dates for public input on hospital lease

Briana Sanchez / Tribune file photo

WILLMAR — The public will get at least two more chances to comment on the potential lease of Rice Memorial Hospital to Carris Health, a subsidiary of CentraCare Health, before the Willmar City Council votes on the agreement later this month.

"The earliest the council will make a determination on this will be November 20," Mayor Marv Calvin said.

The Willmar City Council has the final say over the city-owned hospital and at its meeting Monday set the date for a required public hearing.

During its work session Monday night before the regular meeting, the council also agreed to hold a public meeting at 7 p.m. Nov. 14, at a location to be determined.

The required public hearing on the overall lease agreement is set for 7 p.m. Nov. 20 during the next regular council meeting. The hearing is mandated because the hospital bonds need to be converted to qualified 501(c)3 bonds — as Carris Health will be a nonprofit entity — from general obligation hospital revenue refunding bonds.

The Rice Memorial Hospital board approved a series of agreements last week to create Carris Health. The affiliation would bring together Rice Hospital and Affiliated Community Medical Centers' regional physician group under the umbrella of Carris Health. ACMC is finalizing its own agreements.

The proposed agreements approved by the hospital board and now in front of the council lay out terms that Carris Health will lease Rice Memorial Hospital from the city of Willmar for 30 years, with an automatic renewal for a second term of 30 years. There is also an option that Carris Health could purchase Rice Hospital from the city after 10 years, as long as any outstanding bonds have been paid off.

"All the procedure requirements will have to be met," including a public referendum, for a sale to be approved, Rice Hospital legal counsel Jill Radloff said.

Carris Health will pay the city of Willmar rental payments that will be equal to or exceed the amount required to pay the principal and interest on the bonds.

"Carris Health will meet all the requirements of the bonds," Radloff said.

The city will also receive an intergovernmental transfer of $300,000 a year from Carris Health.

The documents regarding the lease and affiliation also include language regarding healthcare services at the hospital, employment, capital investment in the hospital and local control of hospital operations.

"The documents in front of us clearly reflect what I hoped would happen," Calvin said.

James Thoms, a nurse at Rice, spoke during both the work session and the regular meeting. He brought up concerns that employees still have regarding union contracts; the continuity of services at the hospital, including which services are protected in the agreement; health insurance for employees; and the replacement pension plan being offered since employees will no longer be eligible for the government program for public employees.

"I really believe that we can come together and really support this merger. I feel it is a good thing overall. We're missing that transparent piece," Thoms said, adding he and his colleagues just want assurances that their questions and concerns will be squared away before the council makes its final decision.

The agreement documents between Rice and Carris Health specify that union contracts will be honored. However, Thoms said there are employee concerns that the current language in the documents could give Carris Health a loophole or wiggle room to undermine those contracts. In addition, Rice employees will transfer over as Carris Health employees, in the same positions, after a streamlined application process and government-mandated background checks.

"We tried to make it as simplified as we could," Rice Hospital CEO Mike Schramm said.

In the lease agreement, Carris Health agrees that health care services including inpatient beds, emergency department, surgery services, therapy services, ambulance services and obstetrical services will not be limited, reduced or eliminated without prior approval of the Rice Hospital Board. Schramm explained that other services could also be considered necessary, but that the negotiating parties wanted some flexibility in the agreement, due to the ever-changing face of healthcare.

"What we are trying to do is enhance our health care system," Schramm said.